Order Code RL33520
Specialty Crops: 2007 Farm Bill Issues
Updated October 31, 2007
Jean M. Rawson
Specialist in Agricultural Policy
Resources, Science, and Industry Division

---

Specialty Crops: 2007 Farm Bill Issues
Summary
Congress is moving ahead expeditiously with consideration of omnibus
legislation to replace the expiring Farm Security and Rural Investment Act of 2002
(P.L. 107-171, the 2002 farm bill). Farm bill policies governing U.S. Department of
Agriculture (USDA) programs on marketing, crop insurance and disaster assistance,
protection against pests and diseases, export promotion, and domestic food
assistance, among others, are important to the competitiveness of the specialty crop
sector of U.S. agriculture. The sector includes fruit, vegetable, tree nut, and nursery
crop producers, processors, manufacturers, wholesalers, importers, and exporters.
Although specialty crops are not eligible for direct support under USDA’s farm
commodity price and income support programs, the policies that Congress sets for
the those programs affect them. Chief among these policies is one Congress
originally adopted in the 1996 farm bill, and extended through 2007 in the 2002 farm
bill, that largely restricts commodity program participants from planting fruits and
vegetables on program base acres. Specialty crop interests long have maintained that
the provision is essential to protect the sector from the economic damage that could
occur if additional acres of vegetables (in particular) suddenly came into production.
On the other hand, because the planting restriction has come under challenge in the
World Trade Organization (WTO), the Administration argued in favor of lifting it in
the 2007 farm bill.
Both H.R. 2419 (the House-passed 2007 farm bill) and the bill that the Senate
Agriculture Committee reported on October 25, 2007, extend the planting restriction
through FY2012. The House farm bill includes a separate title covering horticultural
(specialty) and organic crops (Title X), which contains a total of $1.6 billion in
mandatory funds and authorized appropriations over five years for several major new
and continuing programs. The Senate committee-reported bill contains some of the
same specialty crop and organic agriculture provisions as H.R. 2419. It provides
$393.2 million in mandatory funds and authority for at least $40 million in
appropriations over five years. The Senate committee provisions are contained in
Subtitle F of Title I, Producer Income Protection Programs (the commodity title).
The bills generally concur on provisions to (1) continue the program making
block grants to states for research, marketing, and promotion projects benefitting
specialty crops, though they differ on the level of mandatory funding ($270 million
over five years in the Senate measure, $365 million in H.R. 2419); (2) continue the
program of cost-share assistance to producers for organic certification, with a one-
time transfer of $22 million in mandatory funds; and (3) expand the current Farmers’
Market Promotion Program, providing $30 million (Senate) or $35 million (H.R.
2419) in mandatory funds. The bills differ on provisions concerning pest and disease
surveillance; purchases of fruits, vegetables, and nuts for domestic nutrition programs
above those already required; and changing the definition of specialty crop to include
aquaculture (in the Senate version), among other things.
This report will be updated as necessary as congressional consideration of the
2007 farm bill progresses.

---

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sector Snapshot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Selected Issues and Their Current Status in the 2007 Farm Bill Process . . . . . . . 3
Planting Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Government Purchases for Nutrition Programs . . . . . . . . . . . . . . . . . . . . . . . 3
Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Market Expansion Through Promotion Programs . . . . . . . . . . . . . . . . . . . . . 4
Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Disease and Pest Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Organic Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Additional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
List of Figures
Figure 1. Value of Vegetables, Melons, Potatoes, and Sweet Potatoes as
Percent of Total Market Value of Agricultural Products Sold: 2002 . . . . . . 8
Figure 2. Value of Fruits, Tree Nuts and Berries as Percent of
Total Market Value of Agricultural Products Sold: 2002 . . . . . . . . . . . . . . . 9
Figure 3. Value of Nursery, Greenhouse, Floriculture, and Sod as Percent
of Total Market Value of Agricultural Products Sold: 2002 . . . . . . . . . . . . 10

---

Specialty Crops: 2007 Farm Bill Issues
Introduction
Specialty crops (fruits, vegetables, tree nuts, and nursery crops) are not eligible
for direct support under USDA’s farm commodity price and income support
programs. Nonetheless, the policies that Congress sets for those programs
significantly affect the specialty crop sector’s economic well-being. Federal policies
on trade, conservation, credit, marketing programs, domestic food assistance, and
research also all affect the specialty crop sector.1
Congress sets the policies in these areas, for the most part, in an omnibus, multi-
year authorizing law commonly called the “farm bill.” Many of the provisions of the
most recent omnibus farm bill, the Farm Security and Rural Investment Act of 2002
(P.L. 107-171), expire in 2007. In the second session of the 109th Congress, the
House Committee on Agriculture held field hearings to gather information from
stakeholders in preparation for consideration of a new farm bill to replace the
expiring one.
Some stakeholders and policymakers are calling for specialty crop issues to
occupy a larger role in farm bill policy discussions than in the past. They note that
the traditional farm commodity support programs are under pressure from constraints
on the federal budget, as well as from developments in existing trade obligations and
from negotiations on further trade agreements.2 Policies covering U.S. agriculture
more comprehensively could provide a way to address those pressures while
increasing U.S. competitiveness, they argue.
Several major legislative proposals focusing on policies and programs of
importance to the specialty crop sector were introduced in the 110th Congress in
preparation for the 2007 farm bill debate. These bills include H.R. 1600 (Cardoza),
the EAT Healthy America Act; H.R. 1551 (Kind)/S. 919 (Menendez), the Healthy
Farms, Foods, and Fuels Act; and S. 1160 (Stabenow), the Specialty Crops
Competition Act, among others. The Administration also proposed several policy
reforms affecting specialty crops as part of the comprehensive 2007 farm bill
proposal that it released in February 2007. A number of stakeholder groups also
1 For background information on all federal programs affecting specialty crops, see CRS
Report RL32746, Fruits, Vegetables, and Other Specialty Crops: A Primer on Government
Programs, by Jean M. Rawson.
2 For information on the relationship between international trade negotiations and U.S. farm
policy, see CRS Report RS21005, Agriculture in the WTO Doha Round: The Framework
Agreement and Next Steps, by Joseph J. Schwarz, and CRS Report RS20840, Agriculture
in the WTO: Limits on Domestic Support, by Randy Schnepf.

---

CRS-2
issued position statements concerning the specialty crops issues they would like to
see addressed in the next farm bill.
Sector Snapshot
Sales of fruits, vegetables, and tree nuts account for nearly one-third of U.S.
crop cash receipts and one-fifth of U.S. agricultural exports, according to USDA’s
Economic Research Service (ERS). When floriculture, greenhouse, and nursery
crops are included, specialty crops account for approximately 50% of all U.S. cash
receipts of farm crops.3
Despite their relatively large share of crop receipts, specialty crops occupy only
about 3% of U.S. harvested cropland. Although certain states and regions are
predominant, nearly every state has some commercial specialty crop production
within its borders. Figures 1, 2, and 3 (in the Appendix) illustrate the distribution,
nationwide, of areas producing fruits, vegetables, tree nuts, and nursery crops, shown
as percentages of the total market value of agricultural products sold (including
livestock).4
About three-fourths of growers are considered specialized, which means that
they receive at least half of their gross value of production from the sale of fruits,
vegetables, tree nuts or horticultural crops. According to ERS survey data,
specialized farms account for 95% of the total value of U.S. specialty crop
production, although more than half of them have annual sales of less than $250,000
and identify off-farm income as their primary means of support. Specialized farms
may produce one or two other commodities in addition to their specialty crop,
according to ERS, and about 15% of them also participate in the major commodity
support programs.
The remaining 5% of the value of U.S. specialty crop production comes from
non-specialized fruit and vegetable farms, which may produce as many as four other
commodities (often including livestock) besides their specialty crop. Nearly half of
these farms grow one or more of the major commodity crops and participate in the
price and income support programs, according to ERS.
Vegetables, dry beans, and potatoes — for processing — are grown primarily
on large-acreage, non-specialized commercial farms. California is the overwhelming
leader in production, but certain states in the Northeast, Central and Upper Midwest,
and Pacific Northwest also are major producers.
3 Fruit and Vegetable Backgrounder (USDA, Economic Research Service, April 2006) is
the source for all the statistical information in this section. It is available online at
[http://www.ers.usda.gov/].
4 The maps show the value of specialty crops as a percent of total market value of all
agricultural products sold, including livestock. Data from ERS’s Fruit and Vegetable
Backgounder, cited above in this section, compare specialty crop values to other crop
values.

---

CRS-3
Selected Issues and Their Current Status
in the 2007 Farm Bill Process
Planting Flexibility5
A key issue for the some parts of the specialty crop industry is the continuation
of a 2002 farm bill provision that restricts the ability of participants in the farm
income and commodity price support programs to plant fruits and vegetables on acres
on which they receive benefits (base acres). Congress first inserted this provision in
the 1996 farm act (P.L. 104-127), after it had adopted a proposal to allow producers
of program crops to respond to market signals and grow different crops on base
acreage. The restriction was extended through 2007 by the 2002 farm bill.
Specialty crop producers, in general, have maintained since 1996 that allowing
program crop producers to switch even small numbers of acres to fruits or vegetables
would negatively affect markets, and thus growers’ annual income.
In 2005, a World Trade Organization (WTO) challenge to U.S. farm commodity
programs raised questions concerning the use of the planting flexibility restriction
under existing trade commitments.6 Discussion on whether to extend the restriction
in the next farm bill thus has an important trade policy aspect as well as domestic
market aspect.
A number of reports have been issued since late 2006 that examine the possible
effects on domestic fruit and vegetable producers of eliminating the planting
restriction. These analyses suggest that the adverse effects of removing the
restriction likely would be small relative to the overall industry, although there could
be larger impacts on individual producers, commodities, and regions.
Current Status. The commodity program title of H.R. 2419 maintains the
2002 farm bill provisions restricting the planting of fruits and vegetables on base
acres. It authorizes a pilot Farm Flex program in Indiana under which tomatoes may
be planted on up to 10,000 base acres. The Senate committee-reported bill contains
the same provisions.
Government Purchases for Nutrition Programs
USDA directly purchases and then donates a variety of non-price supported
commodities, including fruit, vegetable, and tree nut products, for consumption
through domestic nutrition and food assistance programs. These purchases and
5 For detailed analysis of this issue, see CRS Report RL34019, Eliminating the Planting
Restrictions on Fruits and Vegetables in the Farm Commodity Programs, by Renee Johnson
and Jim Monke.
6 For more detailed information and analysis of this issue, see CRS Report RS22187, U.S.
Agricultural Policy Response to WTO Cotton Decision, by Randy Schnepf, and CRS Report
RL33697, Potential Challenges to U.S. Farm Subsidies in the WTO, by Randy Schnepf,
Jasper Womach.

---

CRS-4
donations help groups of nutritionally vulnerable recipients (such as low-income
school children, participants at family child care homes, and others) to eat a healthy
diet and avoid hunger, while also helping to balance supply and demand for various
commodities.
Current Status. The House-passed H.R. 2419 contains a provision that sets
the current and projected expenditures of Section 32 funds for purchases of fresh,
frozen, canned, dried, or value-added fruits, vegetables, and nuts for nutrition
programs as the authorized levels for the next five-year farm bill period.7 The Senate
measure does not at this point contain language addressing this issue. Both H.R.
2419 and the Senate measure contain provisions to expand to all states and territories
a pilot program that provides free fresh fruit and vegetable snacks to schools. H.R.
2419 would provide $70 million annually for the program; the Senate measure would
provide $225 million the first year, and index subsequent years’ funding.
Market Expansion Through Promotion Programs
A key provision of the Specialty Crops Competitiveness Act of 2004 (P.L. 108-
465), which was the first law that Congress passed on specialty crop policies
specifically, is the authorization, through FY2009, of a program of block grants to
states to support projects in research, marketing, education, pest and disease
management, production, and food safety. In most states, the state department of
agriculture administers this program. The act authorizes $44.5 million in annual
appropriations for the program; Congress appropriated $7 million in FY2006 and the
same in FY2007.
Expansion of this program and an effort to provide mandatory funding for it is
a major focus in the 2007 farm bill debate. Specialty crop interests have consistently
urged Congress to provide mandatory funds for the block grant program, arguing that
the government should increase its investment in the sector in light of its value to
U.S. agriculture as a whole. However, producer groups and lawmakers from states
where commodity crops predominate are not in favor of redirecting money to support
other programs if it means reducing the current level of support for the commodity
programs.
Current Status. Title X of H.R. 2419 extends the program of block grants to
states and provides mandatory funding for the program totaling $365 million over the
five-year farm bill period. The Senate committee-reported bill provides $270 million
over the period.
The rural development title of the House-passed bill reauthorizes and increases
funding for the Value-Added Producer Grants program that was created by the
Agricultural Risk Protection Act of 2000 (P.L. 106-224), providing a one-time
7 Section 32 is a permanent appropriation that since 1935 has earmarked the equivalent of
30% of annual customs receipts to support the farm sector through a variety of activities, the
largest of which is purchasing food commodities for the child nutrition and other domestic
food programs. For more information, see CRS Report RS20235, Farm and Food Support
Under USDA’s Section 32 Program, by Geoffrey S. Becker.

---

CRS-5
mandatory transfer of $30 million for the program, renamed the Value-Added Market
Development Program. The program makes planning grants and provides working
capital for marketing value-added agricultural products. H.R. 2419 provides that
10% of the funding be set aside for beginning and socially disadvantaged farmers and
ranchers, and that another 10% be reserved to help small and medium-sized farm
operations make marketing alliances with other segments of the supply chain. The
Senate measure reauthorizes the program with no administrative changes, and makes
funding subject to annual appropriations.
The trade title of the House-passed bill provides $38 million over a five-year
period for Technical Assistance for Specialty Crops (TASC), a program that helps
exporters of U.S. specialty crops overcome other countries’ non-tariff trade barriers,
particularly those associated with plant pest and disease concerns. The Senate
provision, which is located in Title I of the bill, provides $29.2 million in mandatory
funds for TASC.
In the House bill, the trade title makes foods produced under the Organic Foods
Production Act of 1990 (Title XXI of P.L. 101-624) eligible for export assistance
under the Market Access Program (MAP) and also increases mandatory funding for
MAP to $225 million annually beginning in FY2008. MAP is a cost-share program
between USDA and commodity organizations or agribusinesses to promote U.S.
agricultural products overseas. The Senate measure expands MAP funding by close
to $20 million annually.
Disease and Pest Protection
Stakeholders traditionally have expressed the concern that efforts to identify and
mitigate the effects of existing pest and disease threats and to prevent the importation
of new ones need to be strengthened.
H.R. 1600 (the EAT Health America Act, introduced in early 2007) included
provisions to establish a new program of cooperative agreements with states to
conduct early pest detection activities, and to return the import and entry agricultural
inspection functions to USDA from the Department of Homeland Security, where
they were transferred in 2003. These provisions appeared in the Horticulture and
Organic Agriculture title that the House Agriculture Committee reported out as part
of the total farm bill on July 23, 2007.
Current Status. Title X of the House-passed H.R. 2419 establishes a
cooperative federal-state program for early pest detection and surveillance and for
threat identification and mitigation. The bill provides $10 million in mandatory
funds for the program in FY2008, $25 million in FY2009, $40 million in FY2010,
$55 million in FY2011, and $70 million in FY2012. The bill that was brought to the
House floor for debate, and subsequently passed, did not contain the provision
returning border inspection to USDA from DHS. The Senate committee-reported bill
does not contain any similar provision.

---

CRS-6
Research
In hearings before the farm bill debate, specialty crops producers and trade
associations argued strongly in favor of increasing federal expenditures for specialty
crop research. They maintained that research provides critical support for the
industry, without risking challenges under international trade rules. The EAT
Healthy America Act (H.R. 1600) and the Administration’s farm bill proposal called
for using mandatory funds to substantially increase agricultural research on the
production and economics of specialty crops.
Current Status. The research title of H.R. 2419 establishes a Specialty Crop
Research Initiative to award competitive grants to scientists for research on a wide
range of issues. It provides $215 million in mandatory funds over the five-year farm
bill period and also authorizes annual appropriations of $100 million for the
Initiative. The research title of the Senate measure likewise establishes an initiative,
and provides $90 million over the farm bill term.
Organic Agriculture
Certain of the horticulture and organic agriculture farm bill proposals that were
introduced or released early in 2007 called for a substantial expansion of the National
Organic Certification Cost-Share program (H.R. 1551/S. 919 and the
Administration’s proposal). The program, which was established by the 2002 farm
bill, gives USDA authority to defray the costs of producers and handlers seeking
organic certification through FY2007, and authorized a one-time, mandatory transfer
of $5 million from the Commodity Credit Corporation (CCC) to establish a National
Organic Certification Cost-Share program. The funds cannot cover more than 75%
($500 maximum) of a producer’s or handler’s costs for becoming certified. The
transfer occurred in FY2002 and remained available until fully expended, which was
in fall 2006.
H.R. 1551/S. 919 also contained a provision to make technical assistance
available to farmers wanting to convert their operations from conventional to organic
practices, and to reimburse transition costs up to $10,000 per farm or handling
operation.
Current Status. Both the House-passed H.R. 2419 and the Senate measure
extend the certification cost-share program and provide for a one-time transfer of $22
million in mandatory funds to be available until expended, and raise the maximum
amount that a producer or handler can receive to $750. H.R. 2419 also provides $3
million in mandatory funds to improve USDA’s collection of segregated data and
survey information about the price, production, and marketing of major organically
produced commodities, while the Senate measure authorizes $5 million annually in
appropriations for that purpose.
The House bill establishes a program of cost-sharing and incentive payments to
producers who want to convert their farms to organic production and authorizes $50
million in annual appropriations to support the program. The Senate measure
contains no similar provision at this time. H.R. 2419 provides $25 million annually

---

CRS-7
in mandatory funds for an Organic Agricultural Research and Extension Initiative,
while the Senate measure would provide $80 million over five years for that purpose.
The Senate measure contains a number of provisions addressing other issues of
importance to the organic community. It would set increased appropriations levels
for the activities of the National Organic Program, which received $2 million in
FY2006 and FY2007. Senate committee language authorizes appropriations of $5
million in FY2008, rising to $11 million in FY2012.
Additional Provisions
In addition to the above, the House and Senate measures at this time include
provisions to —
! increase the amount that nursery tree growers can receive in
payments for weather-related losses under the Tree Assistance
Program from $75,000 to $150,000 (H.R. 2419);
! authorize $20 million in annual appropriations for grants to
communities to help them operate organic gardens or greenhouses
for growing fresh produce in urban areas (H.R. 2419);
! establish a Healthy Food Enterprise Development Center with $7
million in mandatory funds to make competitive grants to entities
that will increase low-income families’ access to healthy affordable
foods (Senate); H.R. 2419 authorizes appropriations for this
purpose;
! allow fruit and vegetable marketing orders to implement quality-
related food safety programs (H.R. 2419);
! encourage USDA to educate consumers and handlers of fresh
produce on science-based sanitary handling methods (H.R. 2419);
the Senate measure authorizes $1 million annually for this purpose;
! establish a matching funds grant program to help state and local
governments, grower cooperatives, and other eligible organizations
improve the cost-effective movement of specialty crops to local,
regional, national, and international markets (House and Senate);
and
! provide $20 million over five years to support a network of facilities
to be sources of pest- and disease-free planting stock for
horticultural crops (House and Senate).

---

CRS-8
Appendix
Figure 1. Value of Vegetables, Melons, Potatoes, and Sweet Potatoes
as Percent of Total Market Value of Agricultural Products Sold: 2002

---

CRS-9
Figure 2. Value of Fruits, Tree Nuts and Berries as Percent
of Total Market Value of Agricultural Products Sold: 2002

---

CRS-10
Figure 3. Value of Nursery, Greenhouse, Floriculture, and Sod
as Percent of Total Market Value
of Agricultural Products Sold: 2002
crsphpgw

---